The next lockdown may well be the knockout blow to the economy. From MN Gordon at economicprism.com:
The popular economic tune being played by the popular press drones on. You know the melody by now…
That the post-pandemic boom is alive and well. That growth is enduring. That blue skies are here to stay.
If you listen closely, however, several notes ring sour.
The Commerce Department reported on Thursday that second quarter gross domestic product (GDP) increased at an annualized rate of 6.5 percent. This may sound good, initially. But economists with Dow Jones had estimated an 8.4 percent Q2 GDP increase. Once again, extreme fiscal stimulus, at the expense of a long term debt burden, drifted off key.
The monetary policy refrain was also lacking. This week, at the Federal Open Market Committee meeting press conference, Fed Chair Jay Powell remarked that, “we’re some way away from having had substantial further progress toward the maximum employment goal.”
Thus the Fed will continue to hold the federal funds rate near zero and will continue creating credit from thin air at a rate of $120 billion per month to purchase Treasuries and mortgage backed securities in the amounts of $80 billion and $40 billion, respectively. By now these damaging actions have become exceedingly mindless. The aim for maximum employment will ultimately prove to be a shortsighted calamity.
If the economy was really strengthening, the Fed would be tapering back these security purchases and even normalizing its balance sheet. At the very least, it would be talking about tapering.
But the economy’s not really strengthening at all. Rather, the economy and financial markets, handicapped by extreme intervention, are entirely dependent on this monetary stimulus.
STRAIGHT LINE LOGIC 